Trusting a Double Agent

ABSTRACT

We analyze trust in a game with a double agent and two adversarial intelligence organizations. Greater trust by one organization makes the agent more inclined to align against that organization because the intelligence advantage sought by the agent must come at the expense of a trustor. Conversely, trusting less than the rival organization makes the agent more tempted to double-cross the rival. We identify conditions for a sequential equilibrium where one organization mixes between trust and distrust and the profit-seeking double agent mixes her alignment between the two organizations. When the game includes both profit-seeking and organization-loyal types of agents, semi-separating equilibria are possible, depending on the distribution of agent types and the quality of information about agents’ trustworthiness. Pure-strategy trust by both organizations can be sequentially rational only with the existence of loyal types.

KEYWORDS:

• Sequential equilibrium
• espionage
• trust
• double agent

JEL CLASSIFICATION:

• C70
• D82

Acknowledgments

The author is grateful for extremely helpful suggestions from two anonymous reviewers and the editor.

Disclosure Statement

No potential conflict of interest is reported by the author.

Supplementary Material

Supplemental data for this article can be accessed here.